Moily defers diesel price hike; HPCL, BPCL slip over 4%

NEW DELHI: The BSEOil & Gas Index came under pressure on Wednesday and was the second largest loser among the BSE sectoral indices, after the BSE Banking Index, as sentiment turned bearish after oil minister Veerappa Moily ruled out any sharp increase in diesel prices in the near future.

"As of now there is no proposal to raise prices," Moily told reporters after announcing the launch of a mega fuel conservation campaign to cut the country's rising fuel subsidy bill.

At 01:30 pm, the BSE Oil & Gas Index was trading 2 per cent lower, led by losses in BPCL, HPCL, which plunged over 4 per cent, while GAIL, Petronet LNG, IOC and Reliance Industries were trading 1-4 per cent lower.

Bharat Petroleum was the biggest loser on the BSE Oil & Gas Index and on the 50-share Nifty index. The stock plunged as much as 5.8 per cent in trade today.

HPCL which dropped a little over 4 per cent in trade managed to recover marginally and was trading 3.4 per cent lower at Rs 187.30. Reliance Industries was trading 3.2 per cent lower at Rs 845.95 and Indian Oil Corporation dropped 1.8 per cent to Rs 215.40.

An ET report quoting Moily said that revenue losses of state oil marketing companies on diesel have jumped to Rs 14.50 a litre mainly because of depreciation of the rupee. "We are concerned about the under-recoveries (revenue losses). We are working on other alternatives to reduce the under-recoveries," he said.

"Honestly, it will all depend on the international crude prices and the rupee-dollar equation going forward. However, purely on the fundamentals, the postponement of the diesel price hike to December has disappointed the markets to a great extent," said Gaurang Shah of Geojit BNP Paribas Financial Services in an interview with ET Now.

"Amongst all the three oil marketing companies that you've named, as a disclosure we have a positive bias towards BPCL, purely on the fundamental side," he added.

Shah hopes that the crude prices will move down and they well see some strength coming back into the rupee against the dollar.